Netflix shoots itself in the foot... aka no more free streaming

I think we'll be cancelling the DVDs (1 at at time plan, and even then sometime we send a disk back unwatched) and just streaming. I like discovering foreign or independent films I'd never watch otherwise, and documentaries, and my husband loves '30s and '40s film noir. (Our recommendations are a mess.). If we want to watch a newer movie, we can just Redbox, and catch new-ish movies On Demand.

Yeah. This is a PR/brand image fuckup, not a pricing fuckup. Maybe they can't help the pricing issues, but they sure as shit can control their message. Heads should roll.

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I agree with this. After mulling this over for several days, I haven't been able to really get upset about the pricing. I get more than my money's worth per month. I spend more on lunch and coffee in two days than I do on this increased price.

The way the news was delivered on the other hand was horrible. I read the email I got and kept thinking "I could have written something 10x better than that half asleep!"

I think we'll be cancelling the DVDs (1 at at time plan, and even then sometime we send a disk back unwatched) and just streaming. I like discovering foreign or independent films I'd never watch otherwise, and documentaries, and my husband loves '30s and '40s film noir. (Our recommendations are a mess.). If we want to watch a newer movie, we can just Redbox, and catch new-ish movies On Demand.

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Sounds like us, our recommendations are all over the place. We had the same plan and sometimes end up not watching movies as well. I already switched to streaming and I'm going to see what our options are. The one thing I'll miss and I don't see an easy replacement for are tv series. There are a lot of them streaming now but that could always change, and there are still plenty that are only on discs. I've gotten more enjoyment out of discovering shows than watching movies for the past year or two now.

Yep. I like a little bit of everything, and so Netflix throws everything but the kitchen sink at me for recommendations.

I'll likely just stick with streaming and do the Redbox thing for new movies. We've got three Redbox locations within 1/2 mile of each other and the house. I don't watch new movies very often, so I will always have a free coupon code when I go to rent one, so this works for me!

I really enjoyed using the site until around a year ago, when they suddenly removed all the friends/lists features. I liked clicking onto other peoples' profiles to see their reviews and ratings, and I even made my own lists of genre films so my friends could check out the shows I recommended. By taking that away, they destroyed the site's sense of community.

That's not the only thing that's happened in the last year: They removed individual season reviews from shows, made the UI on streaming harder to use, and of course raised their prices.

Personally, I made the same decision as Temis. I've watched some great shows and movies on streaming, but the majority of the shows I want to see are only available on DVD. I viewed streaming as a cool bonus, and it sucks that they took that away...I was thinking of alternating every few months just in case there's something special that comes up.

I think eventually the idea will have to be a premium pricing plan for new releases.

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Since movie pricing is already keyed to time (it costs more to see a movie in a theater than to rent it on DVD), the logic of this should be extended - new releases are $X when released, and then the price stairsteps down at predetermined intervals. Customers can set their queue so that Title A is at $X 6 months after theatrical release, Title B is at $Y at 9 months, Title C is at $Z at 12 months, etc.

One moral-of-the-story in this whole monumental fuck-up is that is is absolutely essential to understand - and control! - customers' definition of "what is just." Netflix created expectations of "what is just" in pricing and then violated those expectations. It's not an issue of what really is just (like a lot of people have noted, Netflix's pricing is cheap anyway, and therefore "just" in comparison with other options), but what expectations are being created.

Customers already accept that "quicker means more expensive," so basing pricing on that idea is less likely to cause a shitstorm than inventing new rules that customers are not already used to.

Also, the more options you give customers to customize their pricing structure, the happier they'll be. Letting someone choose X, Y and Z price, keyed towards release date, will result in plenty of people going for X becuase people are impatient after all. But they'll be much happier about it because it was their choice. If X were the only choice, they'd go bitch about it on Facebook.

The great thing about an internet based business is that you can create a panoply of pricing options very cheaply by just building it into the database and let the customers do all the work. The more complication Netflix throws into the pricing structure, the happier the customers will be, staying busy futzing with their queue instead of making trouble. And it makes it more difficult for them to even figure out what the "right" price should be anyway, when there are too many options for easy comparison.

I thought as much. Once Blockbuster started to die, there would be something new to take its place. Not everyone will do streaming. In fact, I think there will always be a market for physical versions of movies and such.

Maybe in the sense that there's still an aficionado market for vinyl records, but it won't be a big one. Streaming "should" take over, if you only consider technology, but there are business related obstacles.

The content providers will be throwing up barriers, since the perceived value of streaming is so much lower than alternate methods of consumption - theaters, DVD purchase - and that means people will expect to pay much less for a product whose production costs aren't going to decrease, which threatens the profits of the producers. We can't expect them to acquiesce to this situation easily, or at all, if they have the power to prevent it, which currently they do.

The public perception is that Hollywood is a bunch of greedy dirtbags, so customers are chomping at the bit to pay bottom dollar for movies and TV shows. Movie and TV studios will fight to hold the line against that, and Netflix will continue to get caught in the middle. But at the very least, Netflix cannot continue to act so stupidly that they end up being lumped in with the Hollywood dirtbags.

A few days late, I know, but Mick Lasalle, lead film critic of the San Francisco Chronicle, delivered an epic smackdown to the online howlers:

In Praise of Netflix

Oh, the whining over a few dollars.

Netflix raised some of their prices yesterday and lowered others. They did the right thing by separating the plans of people who want lots of free movies over the Internet, even if the resolution is miserable, and others willing to wait and to pay to have DVDs delivered.

A lot of people will look at their usage and conclude that they don't need one service or the other. They will make the adjustment and their rates will go down. Others, who download a lot but also get a lot delivered, will find their rates going up slightly, and people in one category -- the ones who download a lot but only rent one movie at a time -- will find the biggest increase. Like five dollars. The outrage. In any case, anyone is free to change plans.

We are living in this weird time in which people think they're entitled to things either for free or almost for free. The other day a guy went up on the site of my ASK MICK column wondering why -- and with an attitude, somewhat incredulous at the stupidity of those serving him -- that the column posted on Sunday was the same as the one he read on Thursday. I didn't have the energy to get on and explain to him that, though the column was apparently posted on Thursday, there is this thing called a newspaper that prints, every Sunday, the actual column that he's reading -- the same newspaper that pays my salary and allows that column to exist -- and that's why the Gate was playing up the column on Sunday. This guy has probably never bought a newspaper in five years but was outraged that this free service was confusing him.

Things cost money, folks. A few extra dollars to get all the movies streamed into your house is either worth it to you or it's not worth it to you. But it's not a moral issue. Netflix has not wronged you. Either pay or don't, but please stop acting like you've been violated. It's childish.

UPDATE: Reading some of the comments, pro and con, I just want to add a two or three things. 1) It wasn't an across the board increase, because some people's rates went DOWN. 2) The most anybody's rates went up is about five bucks. If you don't have five bucks, then why get on the Internet and announce it? I mean, even if it's not your fault, it's an embarrassing position to be in. Also, say you don't have five bucks. That means that, previously, YOU WERE SPENDING YOUR LAST TEN DOLLARS ON NETFLIX, which is even more embarrassing; 3) If you do have five dollars, then what's the big deal? You waste five dollars every time you go buy a coffee -- even if you stiff the coffee maker, you've still wasted $4.25. There's a lot of meanness going on here toward a good company and a wonderful service that has transformed how people rent movies, that has made things remarkably convenient and that has been incredibly reliable.

He's way late, and I wouldn't really call that an "epic smackdown". I've heard that argument since the day of the price increases. Way to make it to the party after everyone's gone home and the janitor's cleaning up, Mick.

Most people's issues weren't so much just the price increase, but the way Netflix handled it, which was stupendously shortsighted. It's one of a recent number of poor marketing and PR decisions that is biting Netflix in the ass.

J. Allen is right, a lot of the anger was in response to the way Netflix handled it, as if they were "rewarding" people by splitting the plans (and not offering a combined plan with a discount).

I'm willing to bet most of the people complaining had a combined plan and wouldn't have minded a dollar or two increase if the company had given a concrete reason as to why it had to raise the rates. But this will be a $6 (60%) increase for people who enjoyed a service which seemed like a perk, yet is now a large additional cost with no discernible increase in quality.

J. Allen is right, a lot of the anger was in response to the way Netflix handled it, as if they were "rewarding" people by splitting the plans (and not offering a combined plan with a discount).

I'm willing to bet most of the people complaining had a combined plan and wouldn't have minded a dollar or two increase if the company had given a concrete reason as to why it had to raise the rates. But this will be a $6 (60%) increase for people who enjoyed a service which seemed like a perk, yet is now a large additional cost with no discernible increase in quality.

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Exactly. In fact, Netflix's handling of this reminds me of one of my favorite scenes in Robin Hood: Men in Tights:

J. Allen is right, a lot of the anger was in response to the way Netflix handled it, as if they were "rewarding" people by splitting the plans (and not offering a combined plan with a discount).

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I don't get that last part at all. Let's assume, for the sake of argument, that Netflix currently charges as low a price as they can, but it's a combined service, which many people don't want. So they split the services into two maximally-cheap services. By wanting a discount for the combined package, you're either telling them to lower their previous earning baseline or to charge the single-service people more in order to make the double-service deal look a tad better by comparison.

This will be a $6 (60%) increase for people who enjoyed a service which seemed like a perk, yet is now a large additional cost with no discernible increase in quality.

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See what you said there? "Seemed like a perk." That's exactly what Lasalle was talking about. The studios want in on the action, and Netflix's expenses go up. They're not going to badmouth the studios for it to the public, though, because they want to keep cutting the best deals they can with them - so that they can save their customers money.

To summarize: the complainers wanted a discount on the combined package, and thus for the single-service people to pay more for no good reason, and they wanted Netflix to risk making us all pay even more by antagonizing the studios - and all because they've gotten used to their "perks".

Seriously, I don't get the big deal. I haven't read the past 11 pages, so perhaps this has been covered, but this was coming for a long time. Was the unlimited streaming service ever free or was it was just part of the combo-package? Now, they split the packages. Given the fact that the postage is included in the monthly pricing, more and more users are signing up, and that people return discs in a frequent rate, a price change was inevitable. Spitting it was a good way to solve the issue as I bet there is a larger percentage of people who do one or other as opposed of doing both equally. If they kept the combo package, I bet the price would have gone up dramatically, or more frequently.

This shouldn't surprise anyone as Netflix's long-term goal is go ditch the discs completely and go purely streaming. This is just the next step towards that.